How Should I Close out the Year the Right Way?
Q. What would you suggest small business do to close out 2012 properly?
A. This week we’ll address closing out 2012. Next week, we’ll discuss getting ready for a successful 2013. We would suggest these activities to wrap up the year
Clean up accounting – You’ll want to tie up any loose ends. Make sure that all expenses are entered and that things are recorded and classified properly. You’ll need accurate financial statements to prepare tax returns and to assess accurately your company’s performance.
Review external relationships – You likely have important relationships with vendors, partners and/or customers. Is your company getting what it needs from the relationship? What changes can be made to improve the benefit that your company is getting or should you end the relationship? It may sound odd, but an equally important question to ask is, are your vendors partners, and/or customers benefiting from the relationship as well? It is certain that if they aren’t benefiting from the relationship, they won’t be doing business with you for long. Business only continues when the relationship is mutually beneficial.
Review performance – How well did your company perform in 2012? Did you achieve your goals? If not, what changes do you need to make? You’ll need to have your accounting cleaned up before you can accurately assess your company’s performance.
Review revenue. Break it down in whatever way is appropriate for your business. You might look at it by product line, by job, by client, by geography or by salesperson. Assess gross margin and profit in a similar way. Look at expenses by line item. There should be one person and only one person responsible for each line item.
What goals did you have that went beyond financial performance? Did you launch a new product line, expand into a new geography or complete an acquisition? Whatever your non-financial goals were, did you achieve them?
Review employees – Year end is a traditional time for employee performance evaluations. Although we feel strongly that employees should receive feedback much more frequently than once a year, it is nevertheless appropriate to assess each person’s performance at the end of the year. Hopefully, you have specific, quantifiable goals against which you can assess each employees performance. Even if you don’t, you’ll want to make a qualitative assessment of performance.
Review yourself – How did you do versus your goals? What would you need to do to take your performance to the next level? Is there a book that you have been meaning to read? Do you want to attend a training course? Should you hire an executive coach? Reaching out for help when you need it is not a sign of weakness. It’s a sign of intelligence and self-awareness.
The end of a year is a great time to assess how you have done and where you stand. It’s also the right time to plan for the coming year. We’ll discuss that next week.